In the case, the SEC alleges that hedge fund portfolio manager Mathew Martoma traded on confidential information about a drug trial provided by Dr. Sidney Gilman, chairman of a safety-monitoring committee overseeing the clinical trial and a paid consultant to an expert networking firm.

According to the SEC complaint, Gilman met Martoma through paid consultations arranged by the networking firm and Gilman received more than $1,000 an hour for his advice. Martoma, portfolio manager at CR Intrinsic Investors, is owned by S.A.C. Capital, the hedge fund founded by Steven A. Cohen.

The SEC said the expert networking firm provided training about federal securities laws to Gilman, reminding him not to share non-public information with clients.

Nevertheless, the insider-trading alleged in the charges stem from connections made through the expert networking group, a trend in many insider trading cases brought by the SEC.

In the spring of 2009, the SEC launched an expert networks investigation, seeking to identify more insider trading related to these intermediary firms.

Thomas Gorman, a former SEC enforcement attorney, noted that the SEC”s expert network investigation was launched following the agency’s review of Primary Global Research, a expert networking firm tied to the insider-trading case involving convicted billionaire and Galleon Group chief Raj Rajaratnam.

“The SEC has brought a whole series of cases that really began out of the Galleon investigation and branched into Primary Global,” Gorman said.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.